tax saving tips
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There are lots of financial schemes available in India. Many of them provides
you guaranteed returns, high interest rates, tax savings under various sections
of INDIAN INCOME TAX ACT and much more benefits.
These financial plans not only provide you money growth but also provide you
with financial security at various steps in your life. It depends on your needs
which product suits you best.
Determine your requirements...whether it short term or long term planning; how
much risk can you afford, risk taking capacity is directly proportional to
returns; whether it will be one time savings or regular savings in small amount
and knowledge of pros and cons of the investment product you buy.
For example, if you are looking for short term savings then you can invest your
money in post offices , government bonds, mutual funds, and if you are
concentrated to long term savings then public provident funds (PPF ), life
insurance, long term bank deposits (FDs, RDs) can help you.
In a Fixed Deposit Saving Scheme a certain sum of money is deposited in the bank
for a specified time period with a fixed rate of interest.
When you want to invest your hard earned money for a longer period of time and
get a regular income, Fixed Deposit Scheme is ideal. It is SAFE, LIQUID and
FETCHES HIGH RETURNS.
Loan / Overdraft facility is available against bank fixed deposits. Now many
banks don't charges for premature withdrawal.
Under a Recurring Bank Deposit Saving Scheme, investor invests a specific amount
in a bank on a monthly basis for a fixed rate of return.
The deposit has a fixed tenure, at the end of which you get your principal sum
as well as the interest earned during that period.
Recurring Deposit provides you the element of compulsion to save at high rates
of interest applicable to Term Deposits along-with liquidity to access that
savings any time.
RBI Bonds are tax saving bonds that have a special provision that allows the
investor to save on tax. These Bonds are instruments that are issued by the RBI.
The interest is compounded half-yearly. Maturity period of RBI Bonds is five
years, and interest received is tax-free in the hands of the investor.
Infrastructure bonds are available through issues of ICICI and IDBI, brought out
in the name of ICICI Safety Bonds and IDBI Flexibonds.
These provide tax-saving benefits under Section 88 of the Income Tax Act, 1961,
for the investor. You can reduce your tax liability by upto Rs 16,000 per annum.
Fixed deposits in companies that earn a fixed rate of return over a period of
time are called Company Fixed Deposits. Financial institutions and Non-Banking
Finance Companies (NBFCs) also accept such deposits.
Life insurance saving schemes for government owned Life Insurance Corporation of
Indiaand other private life insurance companies like Bajaj Allianz, Birla Sun
Life Insurance, HDFC Life Insurance, ICICI Prudential
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